The Persistent Measurement Challenge: B2B Findings From "The CMO Survey"

This post will conclude my discussion of several B2B-specific findings from the August 2021 edition of The CMO Survey. In my earlier posts, I reviewed what the survey revealed about the state of marketing spending and the progress B2B companies have made on the digital transformation of marketing. You can find the two previous posts here and here.

The CMO Survey is a semi-annual survey of senior marketing leaders with for-profit U.S. companies. The survey is directed by Dr. Christine Moorman and sponsored by Duke University's Fuqua School of Business, the American Marketing Association and Deloitte LLP. A more detailed description of the survey is included in the first post in this series.

In this post, I'll focus on what The CMO Survey revealed about how B2B marketers are addressing the perennial challenge of measuring the impact and value of marketing.

Proving the Value of B2B Marketing

It's not news that marketers have been under pressure for the past several years to prove the business value of their activities and programs. The CMO Survey found that these pressures are increasing. Fifty-three percent of the survey respondents with B2B product companies said they are feeling increasing pressure from their CEO to prove the value of marketing. For survey respondents with B2B services companies, the comparable percentage was 68%.

The CMO Survey also addressed what metrics companies are using to measure marketing performance. It asked survey participants to distribute 100 points to reflect the degree to which their company is using seven marketing performance metrics. The following table shows how the respondents with B2B companies distributed the points.

The ultimate objective of most marketing leaders is to be able to measure the impact of marketing activities quantitatively, but this can be challenging, particularly when it comes to measuring the long-term impact of marketing. The CMO Survey asked survey participants which of the following three statements best describes how they demonstrate the short-term and long-term impact of marketing.

• "We prove the impact quantitatively."
• "We have a good qualitative sense of the impact, but not a quantitative impact."
• "We haven't been able to show impact yet."

The following two charts depict how the respondents with B2B product companies and those with B2B services companies answered these questions.

These findings clearly show that measuring the business impact of marketing remains a significant challenge for B2B marketers. Fewer than half of the surveyed B2B marketers said they can measure the short-term impact of marketing quantitatively.

Even fewer B2B marketers can measure the long-term impact of marketing quantitatively - only 27.5% of marketers with B2B product companies, and only 36.4% of marketers with B2B services companies. More concerning, nearly a fifth of marketers with B2B product companies (18.8%), and 13.6% of marketers with B2B services companies cannot show the long-term impact of marketing at all.

Measuring the long-term impact of marketing is a difficult challenge for all marketers, not just B2B marketers. Only about a third of the B2C marketers who responded to The CMO Survey said they can show the long-term impact of their activities quantitatively.

Two years ago, Google published an excellent paper discussing "three grand challenges" relating to the measurement of marketing effectiveness. The authors of the paper acknowledged that perfect solutions for those challenges don't currently exist. In fact, the primary objective of the paper was to focus on the areas where existing methods of measuring marketing effectiveness are "running up against the boundaries of the possible."

I discussed the Google paper in three posts, which you can find here, here and here, and I encourage you to take the time to read the entire paper.

Top image courtesy of theilr via Flickr (CC).

How Effectively Are Companies Managing Content Operations?

Within the last few weeks, two research reports have been published that provide several important insights about how marketers are managing content-related activities and processes. One report is by the Content Marketing Institute ("CMI"), and the second is by Altimeter.

Content marketing has become nearly ubiquitous among both B2B and B2C companies, and the volume of content required to "feed the beast" has been growing exponentially. The need to produce and deliver content that is personalized and contextually relevant in near real time has also increased dramatically. As a result, we are seeing more research that addresses various aspects of content operations.

In this post, I'll review some of the major findings from the research conducted by CMI and Altimeter.

The CMI Research

Source:  Content Marketing Institute

CMI recently published the results of the 2021 Content Management & Strategy Survey (the "CMI Survey"). The CMI Survey was fielded in April of this year and produced 263 responses.

Eighty-three percent of the survey respondents were with B2B or B2B/B2C companies. Forty percent were with companies having 1,000 or more employees, and another 43% were with companies having 100-999 employees. Seventy-nine percent of the respondents were located in North America.

Seventy-eight percent of the respondents in the CMI Survey said their organization takes a strategic approach to managing content, and 81% strongly or somewhat agreed that their company views content as a core business strategy.

The strategic approach is evident in the factors the survey respondents take into account during their content planning process.

• 61% said they always or frequently use structured, repeatable content production processes
• 49% said they always or frequently consider the need to deliver consistent experiences throughout the customer journey
• 26% said they always or frequently consider the need to deliver personalized experiences

CMI asked survey participants about the content development aids they are currently using, and the following table shows the nine aids most frequently identified by survey respondents.

The CMI survey also revealed that marketers are using a variety of technologies to support their content management work. More than half of the survey respondents reported using the following technology tools.

• Email marketing software (85%)
• Social media publishing/analytics (84%)
• Customer relationship management (73%)
• Content management system (72%)
• Content distribution platform (51%)

The picture is more mixed when it comes to how effectively marketers are using their technology tools. For example, 31% of the survey respondents described their company's proficiency with using content-related technologies as expert or advanced, but 42% said they aren't using their technology tools to their full potential.

CMI also asked survey participants about the content management challenges they are facing. Half or more of the respondents cited the following three challenges.

• Communication among teams so everyone is on the same page (58%)
• Enough staff skilled in content strategy (53%)
• Using user experience (UX) design to improve the overall experience a customer has with our organization (50%)

Only 15% of the survey respondents strongly agreed that :  "Our organization extracts meaningful insights from data and analytics derived from the consumption of content." And only 41% somewhat agreed with that statement. So, it's surprising that the ability to use data effectively didn't show up as a major content management challenge. It's possible, of course, that CMI didn't include a data-related challenge in the list provided to survey participants.

The Altimeter Research

Source:  Altimeter

 Altimeter (a Prophet company) recently published the results of The 2021 State of Digital Content study. This research was based on a survey of 375 senior content team executives and practitioners in companies having at least 1,000 employees. Respondents were located in the United States, the UK, Spain, Germany and China. Survey respondents were with companies operating in five industry verticals - banking/finance, healthcare, manufacturing, retail and technology.

The Altimeter study focused on a wide range of content-related topics. In this post, I'll focus on the survey findings that are most related to content management.

Ownership of Content Strategy - Altimeter's research found that in a plurality of the companies represented in the survey (31%), multiple business functions in the company "own" content strategy. With this approach, a company actually has multiple content strategies, which can result in a disjointed customer experience. Fifteen percent of the companies represented in the survey used a hybrid model where senior leaders from relevant functions jointly develop a holistic content strategy. The content team then owns the production of content based on the holistic strategy.

Content Production Model - Fifty percent of the respondents in the Altimeter survey said they use a centralized, dedicated team to create content for any business function in the company that needs it. This model can be described as an "internal agency" or "center of excellence" approach. But 32% of the survey respondents said they are setting up multiple content creation centers within their company to meet the ever-increasing demand for content. These centers are typically focused on different products, regions or functions.

Major Content Challenges - Altimeter asked each survey participant about the biggest challenge they face in creating and delivering content. The following table shows how the survey respondents answered this question.

The Takeaway

The findings of these two research studies provide ample evidence that managing content operations is still a work-in-progress at most business organizations.

Top image courtesy of EpicTopTen.com via Flickr (CC).

Ending the Cold War Between Brand and Demand

 

In 2018, Samuel Scott wrote a column for The Drum in which he contended that the marketing industry has split into two distinct camps that advocate two very different approaches to the practice of marketing. Samuel described this divide as a "Cold War" between "online B2B marketers" and "offline B2C marketers."

A similar Cold War now exists within B2B marketing. The divide is between marketers (and agencies and consultants) who advocate the importance of long-term brand marketing, and those who focus exclusively - or almost exclusively - on shorter-term demand generation marketing. 

To use Samuel's words, B2B brand and demand generation marketers ". . . have different practices, read different publications, attend different conferences, follow different thought leaders, and view the other as outdated or uneducated." 

At present, the proponents of short-term demand generation marketing appear to be winning the "war." Several research studies have confirmed the tilt toward short-term tactics among B2B marketers. For example, in a 2020 survey of over 450 B2B marketers by The Marketing Practice and Marketing Week:

• Only 18% of the respondents said they run campaigns for more than six months.
• Only 20% said they report on a campaign's impact beyond six months.
• Only 33% said they allocate more than 40% of their resources to long-term marketing goals (more than six months).

The bias for short-term marketing is due to several factors, but two stand out in importance. First, the tenure of CMOs is one of the shortest in the C-suite, and therefore marketing leaders are under intense pressure to produce quick results. A 2019 study by Korn Ferry (a global organizational consulting firm) found that the average tenure of CMOs at the 1,000 largest U.S. companies (by revenue) was 3.5 years, the lowest of all C-suite titles.

The second major factor driving the preference for short-term demand generation marketing is that the performance of those programs is relatively easy to measure. The objective of most demand generation programs is to elicit a behavioral response from potential buyers, and those behaviors are easy to track with today's marketing technologies.

In contrast, the objective of most brand marketing programs is to evoke a change in the minds of potential buyers. For example, brand marketing programs are often designed to raise awareness and increase brand salience and mental availability.* Marketing experts have long recognized that these objectives are vital to driving growth, but they are extremely difficult to measure because they don't usually involve observable behaviors.

These factors have combined to cause many B2B marketing leaders to put too little emphasis on brand marketing. Jann Schwarz, the Global Head of The B2B Institute (a think tank funded by LinkedIn), described the situation in stark terms:  "The biggest problem in B2B marketing is pervasive under-investment in brand marketing, which is hurting companies' growth prospects."

The Cold War between B2B brand and demand marketers is particularly unfortunate because there is compelling evidence that companies will maximize their growth potential by balancing their use of long-term brand marketing and short-term demand generation. I discussed some of this evidence in an earlier post, so I won't repeat all of that discussion here.

The most important point is that multiple research studies have shown that consistent brand marketing (when well done, of course)  will improve the effectiveness and efficiency of demand generation marketing programs. A strong brand will substantially increase demand generation conversion rates and ultimately result in lower customer acquisition costs. There is also evidence that a strong brand can reduce the price sensitivity of some prospective buyers and thus improve gross profit margins.

The bottom line is, both effective brand marketing and effective demand generation marketing are needed to maximize growth. So it's time we ended the Cold War.

*Brand salience and mental availability both refer to the propensity of a brand (company/product/service) to be thought of or noticed when a potential customer is in a buying situation.

Gartner Research Maps the Landscape of Marketing Operations

 Image Source:  Gartner, Inc.

Gartner recently published the findings of the 2020 Gartner Marketing Operations and Organization Survey. The survey results are described in two reports - the 2020 Marketing Operations Survey report, and the Marketing Organization Survey 2020 report.

This year's survey was conducted in May and June, and produced 429 respondents in the United States, Canada, France, Germany and the United Kingdom. All respondents were required to be involved in decisions regarding marketing operations and/or the alignment of marketing budgets, resources and processes. The respondents came from a variety of industries, and 91% were with organizations having $1 billion or more in annual revenue.

Given the composition of this survey panel, the findings are most reflective of circumstances in large enterprises. However, many of the findings will also be useful for marketing leaders in mid-size companies.

Here's a  brief overview of some of the more interesting survey findings. Unless otherwise indicated, these findings are described in the 2020 Marketing Operations Survey report.

Adoption of Marketing Operations

Forty-nine percent of the survey respondents said that at least one marketing team in their organization has a dedicated marketing operations leader. Frankly, I was somewhat surprised by this finding. I would have expected this percentage to be higher, given the composition of the survey panel.

Other research has indicated that marketing operations functions have been implemented by many large and mid-size companies. In fact, Gartner's 2019 Marketing Organizational Survey found that more than two-thirds of marketing organizations have a discrete marketing operations function. And in Gartner's 2020-2021 CMO Spend Survey, marketing leaders ranked marketing operations as their third most vital marketing capability, behind only brand strategy and marketing analytics.

Current Scope of Marketing Operations

The 2020 survey also revealed that the responsibilities assigned to the marketing operations function vary significantly across companies. Gartner presented the survey participants with a list of 12 marketing activities and asked which of these activities was currently led or managed by their marketing operations function. The following table shows the percentage of respondents who selected each activity.

As this table shows, companies are using their marketing operations function to manage a wide variety of activities, and no activity was selected by a majority of survey respondents. This finding should not be surprising, given that marketing operations is still a relatively young business function.

Gartner hypothesizes that marketing leaders often create a marketing operations function to address whatever operational issues are most pressing at that time. Therefore, Gartner contends that the marketing operations role resembles that of a "chief of staff" whose primary job is to support the CMO.

Marketing Operations is Expanding

Gartner's research also indicates that marketing leaders plan to expand the scope of their marketing operations function in the near future. Gartner presented the survey participants a list of 12 marketing activities - plus a "none of the above" choice - and asked which of these activities would become part of their marketing operations mandate within the next 12 to 24 months. The five most frequently selected activities were:

• Data sourcing, consolidation and management (29% of respondents)
• Performance management, benchmarking and analytics (29%)
• Strategic planning, alignment and oversight (28%)
• Marketing technology management (27%)
• Maintaining talent audits and capacity needs (26%)

My Take

In my view, marketing operations is destined to become a more important function in the marketing departments of most large and mid-size companies for two main reasons. First, marketing is increasingly dependent on a multitude of technology applications, so the selection, implementation, integration, and management of technology tools is increasingly critical. That is a classic role for marketing operations.

Second, many companies are moving significant portions of marketing work in-house. In Gartner's 2020-2021 CMO Spend Survey, the respondents reported that they had shifted an average of about one-third of the work previously done by external suppliers to in-house teams. For "in-housing" to be successful, companies will need to design and implement effective and efficient work processes, and that too is a classic job for marketing operations.

Two Ways to Improve Your ROI Credibility

With the fourth quarter of 2019 well underway, many marketing leaders will have already started planning for 2020. In most cases, the planning process will include an analysis of how well marketing performed in 2019. and many marketing leaders will use return on investment (ROI) as the primary tool for conducting this assessment.

Over the past two-plus decades, ROI has become the "gold standard" for measuring marketing performance and for communicating the performance and value of marketing to senior company leaders. So you would think that, by now, marketing leaders would thoroughly understand what marketing ROI is, and how to calculate it correctly. Unfortunately, however, that is not always the case, as a recent survey conducted by LinkedIn Marketing Solutions makes clear.

The LinkedIn Research

The Long and Short of ROI report is based on a survey of 4,000 B2B and B2C marketing professionals from 19 countries. Survey respondents worked in a wide range of industry sectors, including technology, financial services, professional services, and manufacturing. The survey was conducted in June 2019.

Most of the results presented in the survey report refer to "digital marketers." Unfortunately, the report does not define who "digital marketers" are, nor does it indicate whether all of the survey respondents were "digital marketers." With that caveat in mind, here are the "headline" findings from the LinkedIn study:

• 70% of digital marketers claim they are currently measuring ROI.
• 77% of digital marketers measure ROI during the first month of a campaign, even though 55% of those marketers reported having a sales cycle that is at least three months long.
• When most digital marketers say they are measuring ROI, they are actually measuring a variety of key performance indicators (KPIs), but not true ROI.
• 63% of digital marketers don't have a high level of confidence in the "ROI" metrics they are currently using.

The LinkedIn survey report argues that marketers should (a) clearly distinguish between KPI-based metrics and ROI, and (b) measure ROI over the length of the sales cycle in order to obtain accurate results.

When You Say ROI . . .Mean ROI

The findings of the LinkedIn survey highlight two of the still all-too-prevalent ways that many marketers are misusing ROI. First, many marketers use "ROI" as a catch-all term to describe a wide variety of benefits produced by marketing activities. But return on investment is a specific financial metric that has a well-established meaning among management and financial professionals.

This means that none of the following constitutes ROI:

• Increased brand awareness
• Increased market share
• Increased customer lifetime value
• Increased average deal size
• Improved conversion rates
• Improved response rates
• Improved NPS/customer satisfaction scores

For many companies, tracking some or all of these performance measures will be valuable, but they do not constitute marketing ROI. Calling any of these benefits "ROI" reflects a misunderstanding of what ROI is, and if a marketing leader presents one of these kinds of ROI calculations to a CEO or CFO, his or her credibility will be weakened.

Calculate ROI Correctly

The second way that many marketers misuse ROI is to calculate it incorrectly. The basic formula for marketing ROI (MROI) is:

MROI = (Gain from Marketing Investment - Cost of Marketing Investment) / Cost of Marketing Investment

So the basic MROI formula contains only three components:

1. The financial gain from the marketing investment
2. The cost of the marketing investment
3. Time - Although the formula doesn't expressly contain a "time" value, MROI is always measured for a defined period of time.

While the basic MROI formula appears to be quite simple, that simplicity is deceptive. In reality, calculating MROI accurately can become a complex task because every component of the formula presents questions that require thoughtful answers and sound judgment calls.

I've addressed many of these issues in several previous posts, so I won't repeat that material here. However, I've provided links to my ROI-related posts below. If you're involved in calculating MROI, I encourage you to take a look at these posts and carefully consider the issues they discuss.

Image courtesy of Rick B via Flickr CC.

ROI-Related Articles

Why Proving the Impact of Marketing is Difficult

For Better Marketing Decisions, Think Incrementally

Increased Profits, Not Higher Revenues, Determine Marketing ROI

Let's End the Obsession with Marketing ROI

Stop Trying to Measure Marketing ROI

Analyzing the ROI Formula - Part 3

Analyzing the ROI Formula - Part 2

Analyzing the ROI Formula - Part 1

The Basic Idea of Return on Investment

Why It's So Hard for Companies to Change

In 2013, Scott Brinker, Hubspot's VP Platform Ecosystem, and the author of the widely-read Chief Marketing Technologist blog, published a post that introduced Martec's Law. In essence, Martec's Law states that technology changes at an exponential (very fast) rate, but organizations change at a logarithmic (much slower) rate. (See Scott's graph below.)

The rapid development of marketing technology is well documented. The 2014 edition of Scott's marketing technology landscape supergraphic contained 947 technology providers. The 2019 edition of the supergraphic contained more than 7,000 technology solutions.

Scott argued that the core problem encapsulated by Martec's Law is that "technology is changing faster than organizations can absorb change." And it's clear that this problem extends far beyond marketing.

Over the past few years, digital transformation - which can be defined as the use of digital technologies to create new, or reengineer existing, processes, culture, and customer experience - has become an important strategic objective objective for many companies. However, the evidence indicates that most digital transformation initiatives have not succeeded.

In recent research by McKinsey & Company, only 16% of survey respondents said their organizations' digital transformations have successfully improved performance and also equipped them to sustain changes over the long term.

So why is change so hard? Hundreds of books and articles have attempted to explain why change is difficult for most organizations, and what business leaders can do to create a greater willingness and capacity to change. While many of these books and articles have contained valuable advice, it seems clear that no one has really identified the "silver bullet" that will consistently boost the capacity for change.

Clayton Christensen has developed a framework that can help us understand why organizational change is difficult. Christensen described this framework in an article in the Harvard Business Review (co-authored with Michael Overdorf), and elaborated on it in The Innovator's Solution (co-authored with Michael Raynor). Christensen developed this framework to help business leaders succeed at disruptive innovation, but it is equally useful for identifying the factors that determine how effectively a company can make any significant, far-reaching change.

According to Christensen, the ability of an organization to succeed with any significant transformation depends on three types of capabilities - resources, processes, and values.

Resources - Resources include people and tangible business assets such as cash, facilities, equipment, and technology solutions. Resources can also include intangible assets like intellectual property and relationships with suppliers and customers.

Processes - Processes are the activities that organizations perform to transform resource inputs into finished products or services.

Values - Values include the ethical principles that an organization "lives by," but the term has a broader meaning in this framework. It also includes the criteria or standards that people in the organization use to set priorities and make decisions. Therefore, values include the myriad of (mostly unwritten) cultural rules and norms that influence how people in the organization think and act.

Resources, processes, and values largely dictate what an organization can and cannot accomplish. And they both enable and constrain an organization's capacity for change.

To understand why organizational change is difficult, it's critical to keep two points in mind about resources, processes, and values. First, any significant change or transformation will require changes in all three organizational capabilities. In other words, any successful transformation will likely require the organization to find or develop new resources (or redeploy existing resources), develop new processes (or reengineer existing processes), and modify its values.

The second important point is that the three organizational capabilities are not equally easy to change. Resources are usually the most flexible capability and are relatively easy to change. Processes are usually less flexible than resources and are therefore somewhat more difficult to change.

Clearly though, the most difficult capability to change is values. Values are difficult to change because they tend to develop slowly and over time, they become deeply ingrained in an organization's cultural DNA. When change initiatives don't succeed, it's most likely because company leaders have underestimated (a) the need to change core company values, or (b) how difficult those changes are to make.

Christensen's RPV framework doesn't make organizational change easier to accomplish, but it can help business leaders, including those in marketing, to identify where the greatest barriers to change are likely to exist.

Top image courtesy of R/DV/RS via Flickr CC.

Measuring the Maturity of Marketing Operations

A recent survey conducted by Econsultancy in partnership with Sojourn Solutions provides several valuable insights regarding the state of marketing operations (MOPS) at large and mid-size B2B companies.

The 2019 Marketing Operations Maturity Benchmarking Report was based on a survey of 171 senior executives at B2B companies with 2018 revenues of more than $250 million. Thirty-eight percent of the respondents reported 2018 revenues of more than $1 billion.

Sixty-three percent of the survey respondents were located in North America, and 32% were based in the U.K. All respondents were manager level or above, and all described themselves as either a member of their company's marketing operations team (45%) or very familiar with its operations (55%).

The objective of this research was to benchmark the performance of the marketing operations function along several dimensions and to identify what aspects of marketing operations companies are doing well, and where there is room for improvement.

Econsultancy broke survey respondents into two groups, and the survey report provides data for each of these groups. Top Performers were the respondents who reported that their marketing function exceeded it top business goal in 2018. Top Performers accounted for one-third of the total survey panel. The remaining two-thirds of the survey sample were called Mainstream respondents.

The differences between Top Performers and Mainstream respondents revealed by the survey results are both significant and consistent. The following table contains nine of the performance benchmarking statements Econsultancy included in the survey. The table also shows the percentage of Top Performers and Mainstream respondents who said that each statement was fully or mostly true for their marketing operations function.

As the table shows, there is a gap of at least 24 percentage points between Top Performers and Mainstream respondents on all nine of the performance benchmarks, and a gap of at least 31 percentage points on seven of the benchmarks.

Econsultancy captured the essence of the difference between Top Performers and Mainstream organizations in these terms:

"Relative to their mainstream peers, top performers are further along in the marketing operations evolution in every measure. This striking consistency reflects the interconnected nature of modern marketing; few disciplines within MOPS can exist independently. Top performers are far more likely to have reached a point of marketing-led change, effective implementation or cultural acceptance across a variety of measures."

The Econsultancy survey provides several interesting insights about the maturity of MOPS at B2B companies, but there are a couple of things to keep in mind about this research. First, the survey only produced 171 total responses, which means that the Top Performers group contained fewer than 60 respondents. We should be cautious about giving a great deal of weight to data derived from such a small survey sample.

My second point relates to how Econsultancy divided the survey panel for analysis and reporting purposes. As I indicated earlier, Econsultancy classified respondents who reported that their marketing function had exceeded its top business goal in 2018 as Top Performers. This group represented about one-third of the total respondents. Econsultancy classified the remaining two-thirds of the respondents as Mainstream.

About one-third (35%) of the total respondents reported that their marketing function had met its top business goal in 2018. These respondents were included in the Mainstream group along with those who said their marketing function had not achieved is top 2018 business goal.

I wish Econsultancy had divided these respondents into separate groups for reporting purposes because that would have provided a good picture of the attributes of "average" performers. I suspect that the gaps between the "average performers" and the Top Performers would be narrower, while the gaps between the Top Performers and the laggard group (those who missed their top 2018 goal) would be even wider.

Top image courtesy of Personal Creations via Flickr CC.

What Distinguishes Top-Performing Marketing Organizations

A recent survey by B2B Marketing and The Mx Group identified several differences between top-performing and poorly-performing B2B marketers. Not surprisingly, the research revealed that the best-performing marketing organizations excel at maintaining accurate data and integrating data systems, fully leveraging technology, and closely aligning with sales.

This survey included respondents working in a range of industries, with technology (27%), professional services (16%), and industrial/manufacturing/engineering (13%) being the largest segments represented. Eighty-eight percent of the respondents were located in the U.S. or the U.K., and 83% were CEOs, CMOs/VPs of marketing, directors of marketing, marketing managers, or marketing executives.

To identify the distinguishing attributes and behaviors of top-performing marketers, B2B Marketing and The Mx Group polled survey participants about ten factors that affect marketing performance. Top performers (17% of all survey participants) were respondents who rated themselves as successful or very successful across all survey questions. Poor performers (14% of all survey participants) were respondents who rated themselves as unsuccessful across all survey questions.

The following table lists the ten marketing performance factors that this research addressed. The table also shows the percentages of top performers and poor performers for each factor and the percentage point difference between top-performing and poorly-performing respondents. As the table shows, there is a gap of more than thirty percentage points between top performers and poor performers for seven of the ten marketing performance factors.

The data from this survey is interesting, but with a few exceptions, the reported findings leave a significant "hole in the middle." As noted earlier, top performers included only those respondents who rated themselves as successful or very successful on all ten performance factors, while poor performers were respondents who rated themselves as unsuccessful on all of the factors. Together, the top performers and the poor performers account for only 31% of the total survey respondents. So, 69% of the respondents fell somewhere in the middle, and the survey report provides little data about the attributes of those respondents.

It does, however, include overall response data regarding two important issues. First, only 31% of all survey respondents said they have fully deployed their marketing automation system. I would have expected this percentage to be higher by now, given that B2B marketing automation is a relatively mature technology category.

But other recent research has produced similar results. For example, in the 2019 Data-Driven Marketing & Advertising Outlook study conducted by Adweek Branded on behalf of Dun & Bradstreet, only 26% of surveyed B2B marketers said they use the "advanced functions" of their marketing automation platform. Another 31% of the survey respondents said they only use the "basic functions" of their marketing automation system.

The other somewhat surprising finding in the B2B Marketing/Mx Group survey relates to marketing-sales alignment. The survey report states that most of the surveyed marketers claim success at aligning with sales. However, specific survey findings raise some doubt about the accuracy of this perception.

Only 25% of all survey respondents said they and their sales counterparts share a "full definition" of who constitutes a qualified lead. Another 56% of the respondents said they and sales have agreed on a "limited definition" of a qualified lead, but they have no formal documentation of that definition in place.

This finding is particularly concerning, given the undeniable need to have sales and marketing teams work collaboratively to maximize profitable growth. Obviously, effective marketing-sales alignment requires much more than a shared definition of a qualified lead, but that is one of the essential building blocks.

It's increasingly difficult to understand why marketing-sales alignment is still such a seemingly difficult challenge for many B2B companies. The need for better alignment and closer collaboration between the two functions is clear and unambiguous. And one thing is certain. In today's B2B demand generation environment, the lack of effective alignment and meaningful collaboration between marketing and sales is both intolerable and inexcusable.

Top image courtesy of Ron Cogswell via Flickr CC.

The Differences Between B2B and B2C Marketing That Still Matter

In a recent column published at The Drum, Samuel Scott argued that the marketing industry has split into two distinct camps that have adopted and now advocate two very different approaches to the practice of marketing.

According to Samuel, the divide is between "online B2B marketers" who "want to gain and convert website traffic into leads" and "offline B2C marketers" who "want to build brands among mass audiences." He wrote:  "The result is a new Cold War in which the two sides have different practices, read different publications, attend different conferences, follow different thought leaders, and view the other as outdated or uneducated."

Samuel contends that the big problem with this polarization of marketing is that people in both camps have an incomplete or distorted view of marketing. He wrote:  "Both offline B2C and online B2B marketers can learn from the other's news outlets, conferences, and thought leaders - if only they would choose to do so by openly integrating everything into simply 'marcom.' Today, there is no 'offline marketing' and 'digital marketing.' There is only marketing."

Many of the observations in this column are absolutely on point, but I also think that some of the differences Samuel describes exist for valid business reasons. Recently, it's become popular to downplay the differences between B2B and B2C marketing. Some commentators even argue that all marketing should be viewed as "business-to-human" or "human-to-human."

It's certainly accurate to say that virtually all forms of marketing involve the communication of a message to a human being. It's equally true that business decision makers are also consumers, and that the attitudes and preferences they have as consumers don't disappear when they're acting in a professional capacity. This doesn't mean, however, that there are no important or meaningful differences between B2B and B2C marketing.

Samuel argued in his column that the current divide between B2C and B2B marketing is largely the result of longstanding assumptions, the main one being that "B2C is emotional and has short sales cycles while B2B is logical with long sales cycles." He then correctly points out that this assumption is, at best, an oversimplification of reality.

A more practical and meaningful difference between B2C and B2B marketing is that most B2C marketing involves the communication of a relatively simple message to a large or very large audience, while most B2B marketing requires the communication of more complex messages to a relatively small audience. This difference alone dictates the use of different marketing strategies, channels, and tactics.

The combination of simple message-large audience explains why many B2C marketers still emphasize advertising via offline mass media channels. Short ads (think 30 or 60 seconds) can be effective at communicating simple messages, and mass media channels are still an efficient way to reach large audiences.

And despite assertions to the contrary, several recent research studies have shown that advertising still has a significant impact on consumers. For example, in a 2017 survey of 1,030 U.S. consumers by Clutch, 90% of respondents said that advertisements influence their purchase decisions. The Clutch survey also found that TV is still the most influential medium for advertising. Sixty percent of the respondents said they are likely to make a purchase after seeing or hearing a TV ad.

Since many B2B marketers must communicate more complex messages to a relatively small audience of business decision makers, it shouldn't be surprising that they tend to emphasize the use of marketing channels (such as email) that can be more precisely targeted and marketing techniques (such as content marketing) that can accommodate longer communication formats.

So, is there a "Cold War" in marketing as Samuel Scott suggests? I agree that marketers who work in the various marketing disciplines tend to read many of the same publications, attend many of the same conferences, and follow many of the same thought leaders. To some extent, this kind of "tribalism" is inevitable. But it can also create echo chambers in which the particular and narrow perspectives of each marketing discipline are reinforced and amplified.

To combat the pernicious effects of these echo chambers, marketing leaders need to ensure that the members of their marketing teams are regularly exposed to information about the broader aspects of marketing. Such regular exposure helps reduce the impact of echo chambers and avoid the development of marketing silos.

Image courtesy of Vic via Flickr CC.

Why You Need a "Systems" Mindset to Optimize Martech

At the recent MarTech West conference in San Jose, California, Scott Brinker unveiled the new version of his famous (or perhaps infamous) marketing technology landscape supergraphic (shown above). To no one's surprise, the new graphic shows that the number of marketing technology solutions continues to grow at a breathtaking pace.

Scott's 2018 graphic includes 6,829 technology solutions from 6,242 unique vendors. The new graphic has 1,448 more solutions than the 2017 versions, which constitutes a year-over-year growth rate of 27%. But the expansion of the marketing technology space is even more dramatic when you consider the growth that's occurred over the past few years. Scott Brinker made this point in a recent blog post:  ". . . the size of the 2018 landscape is equivalent to all of the marketing tech landscapes we assembled from 2011 through 2016 added together."

With so many technologies available, the task of assembling the right combination of marketing software applications (the marketing technology stack) can easily feel overwhelming. And because technology now plays such a vital role in marketing, it's become critical that marketers get technology decisions right.

Fortunately, there's a well-established and proven process for evaluating business software applications, and there are abundant resources describing that process. For example, many providers of marketing software solutions have published "buying guides" that can help marketers navigate the software selection process.

But in addition to making sound decisions when selecting individual software applications, marketers must also focus on assembling a marketing technology stack that, as a whole, will deliver maximum results for their company. This adds a layer of complexity to the technology selection process, but using a "systems" view will help marketers design and assemble an optimal martech stack.

Think Ecosystem

Today's customers and prospects routinely use multiple communications methods and channels to interact with companies. They expect to find whatever information they want or need, whenever they want or need it, via the channel of their choice. And they increasingly expect companies to remember their interactions as they move from channel to channel. These expectations put special demands on marketing technology systems.

In order to optimize the performance of their marketing technology tools, marketers need to think of their marketing technology stack as an ecosystem of interdependent capabilities. This interdependence means that the components of the stack must be integrated at appropriate levels to produce maximum results.

Recent research has shown that many companies have more work to do to achieve the necessary level of integration. For example, in the 2018 Digital Trends study by Econsultancy (published in association with Adobe), 43% of survey respondents said their marketing technology stack is "fragmented" with "inconsistent integration between technologies."

Lack of integration has a particularly adverse impact on a company's ability to provide personalized marketing communications and customer experiences. In a recent survey by Dynamic Yield, only 24% of respondents reported having an integrated tech stack that allowed them to personalize communications and experiences across all touch points.

All of this means that marketers need to ask two critical questions when they're evaluating a new marketing software application:

1. How will this application complement or enhance the performance of our existing marketing technology ecosystem?
2. Can the application be easily integrated with our existing marketing technology tools?

Illustration courtesy of Scott Brinker.

Use the 70-20-10 Formula for Better B2B Marketing

The most important and difficult decisions that marketing leaders must make inevitably involve the allocation of marketing resources (money, people, time, etc.).

Regardless of company size, the resources available for marketing are rarely sufficient to enable marketing leaders to do everything they'd like to do. Therefore, resource allocation is an intrinsic part of every significant marketing decision, and the challenge for marketing leaders is to use their finite resources for programs and capabilities that will produce maximum results.

Deciding where and how to invest limited marketing resources has never been simple or easy, but these decisions have become more complex and challenging because today's marketing leaders have more options than ever before. Over the past several years, the number of marketing channels and techniques has grown dramatically, and the explosive proliferation of marketing technologies has been well documented.

Marketing investment decisions are further complicated by the need to maximize performance in the present, while simultaneously laying the foundation for success in the future. Because customer expectations and preferences are constantly evolving, marketing techniques that are highly effective today may become less effective in the future, while marketing techniques and capabilities that aren't very important today may become key to future marketing success.

Fortunately, there's a good rule of thumb called the 70-20-10 rule that marketers can use to address this particular aspect of the resource allocation challenge. The 70-20-10 rule is used for a variety of business purposes. Many companies, including Google, use it to manage innovation resources. Coca Cola has reportedly used a version of the rule for years to guide marketing investment decisions. Here's how the rule works.

The 70%

The marketing version of the 70-20-10 rule states that about 70% of your marketing budget should be spent on capabilities and programs with a well-established track record of acceptable performance. These will include marketing channels, techniques, and technologies that your company is currently using successfully.

The 70-20-10 rule does not mean that companies should simply "keep doing what we're already doing." It means that marketers should evaluate how well their "bread and butter" programs are performing and continue to invest in those that are delivering acceptable results.

Your primary goal with these capabilities and programs is to drive incremental performance improvements.

The 20%

According to the 70-20-10 rule, about 20% of your marketing budget should be invested in "new," but promising capabilities and techniques. This category will typically include channels and techniques that a growing number of other companies are using successfully. In many cases, these channels and techniques will be approaching mainstream adoption.

Investments in this category are not quite as safe as those in the 70% group, but they often relate to capabilities or technologies that will become critical to your success in the near-term future.

The 10%

The remaining 10% of your marketing budget should be invested in truly new capabilities and techniques that have just emerged on the scene. Obviously, these are high-risk investments that aren't likely to produce short-term benefits.

For small and mid-size companies, the investments in this category may consist primarily of learning about the new techniques of capabilities - e.g. sending members of the marketing team to conferences or other educational events. Larger companies may also decide to launch small pilot projects to experiment with a new capability or technique.

Caveats

As with other rules of thumb, marketers should view the 70-20-10 rule as a guide rather than a precise prescription. The specific percentages in the rule may not be appropriate for every business in every competitive situation. The benefit of the rule is that it leads marketers to give appropriate consideration to both current and future needs.

Image courtesy of Vall d'Hebron Institut de Recerca VHIR via Flickr CC.

Have We Really Improved Marketing Productivity?

The recent pace of change in B2B marketing has been nothing short of breathtaking. Over the past 10-15 years, new marketing technologies, channels, and techniques have appeared in rapid succession, and many of these innovations are now in widespread use. B2B marketing automation, content marketing, inbound marketing, and social media marketing are just of few of the technologies and techniques that have changed B2B marketing over the past decade or so.

By all indications, the pace of change is not slowing. During the past couple of years, many B2B companies have adopted account-based marketing, and many have begun using predictive marketing analytics technologies to support ABM and other marketing efforts. And just within the past few months, we've started to hear that machine learning and artificial intelligence will have a major impact on B2B marketing in the near future.

All of these innovations have promised to improve marketing effectiveness and efficiency, and numerous research studies purport to show that they are delivering a wide range of benefits. But have these innovations really improved the bottom-line productivity of B2B marketing? Can we show - in a credible and convincing way - that B2B marketing is more financially productive today than it was 10 or 15 years ago?

Obviously, these questions must be answered on a company-by-company basis. Some B2B marketers may be able to show that their marketing efforts have become significantly more productive over the past several years. But there is evidence suggesting that some aspects of B2B marketing performance haven't improved as much as we might have anticipated.

One indicator of B2B marketing and sales productivity is the efficiency of the demand generation process. Efficiency is usually measured by the percentage of potential buyers or leads who are "converting" from one lead stage to the next.

Many B2B companies use the Demand Waterfall model developed by SiriusDecisions to describe the stages of the lead-to-revenue process, and from time to time, SiriusDecisions publishes "average" and "best-in-class" conversion rates that link to the Demand Waterfall. The following table shows the conversion rates reported by SiriusDecisions for 2008 and 2014:

What is most striking about this data is that it indicates there was essentially no improvement in conversion rates - particularly the overall lead-to-revenue conversion rate - between 2008 and 2014.

The 2008 conversion rates largely reflect marketing productivity before many of the marketing innovations mentioned above had become widely adopted. But research has shown that by 2014, a significant number of companies were using these technologies and techniques.

• 60% of large companies (more than $500 million in annual revenue) had acquired a marketing automation solution. (Raab Associates)
• 93% of B2B marketers were using content marketing in some form. (Content Marketing Institute/MarketingProfs)
• 86% of companies were running inbound marketing programs. (Hubspot)

Of course, lead conversion rates aren't the only relevant measure of marketing productivity, and there may be a reasonable explanation for the lack of improvement shown in the SiriusDecisions data. For example, the 2014 conversion rates would not have captured the impact of the shift to account-based marketing that's occurred over the past couple of years. Nevertheless, this data should be a wake-up call for B2B marketers.

Senior company leaders are increasingly expecting marketers to demonstrate that their activities and programs are creating economic value for the enterprise and improving enterprise financial performance. Many senior leaders are no longer satisfied with the tactical performance indicators (campaign response rates, content downloads, etc.) that marketers have traditionally used to describe marketing performance. What senior business leaders really want to see is proof that marketing is delivering financial results and that the dollars they are investing in marketing are being spent as efficiently as possible.

The important point here is that the value of any marketing technology or method must ultimately be judged by whether its use improves marketing productivity. So that's what marketers must be prepared to demonstrate.

Top image courtesy of Kelly Teague via Flickr CC.

How Do Your Buyers Prefer to Receive Business Communications?

Last month, MarketingSherpa republished a chart that showed how people of various ages prefer to receive business communications. The chart was based on a survey of U.S. adults that was fielded last year and produced 2,057 responses.

In this survey, MarketingSherpa asked participants:  "In which of the following ways, if any, would you prefer companies to communicate with you?" Survey participants were given thirteen possible choices and could choose as many as they wanted. MarketingSherpa divided respondents into the following five age groups and presented the results by age group:

• 18 - 34
• 35 - 44
• 45 - 54
• 55 - 64
• 65+

This survey did not focus on business buyers, but it did ask participants how they prefer to receive business-related communications. Therefore, the survey results can provide B2B marketers some valuable insights. In this post, I'll focus on the three age groups that are likely to include the vast majority of B2B buyers, and I'll provide a general "rule of thumb" description of the types of buyers that are likely to be found in each age group.

The 55 - 64 Age Group

The table below shows the five communication channels most preferred by respondents in the 55 - 64 age group. Most B2B C-level executives will probably fall in this age group, although it's not that uncommon to see C-level leaders who are younger.

The 45 - 54 Age Group

The following table shows the top five channels identified by respondents in the 45 - 54 age group. This age group is probably where you will find B2B executives who are just below the C-level. It is likely to include business unit or regional managers, as well as functional executives - such as marketing, sales, IT, finance, or operations - who report directly to C-level executives.

The 35 - 44 Age Group

The table below shows the five channels most preferred by respondents in the 35 - 44 age group. In the B2B world, this group is probably where you will find mid-level executives and managers who influence, but do not make, final buying decisions. These "buyers" are important for B2B marketers because they often perform most of the research relating to potential purchases.

Insights from the Survey

The findings of the MarketingSherpa survey clearly show that people of different ages don't differ as much as we might expect when it comes to how they prefer to receive business communications. For example, e-mail was the most preferred channel, and postal mail was the second most preferred channel for all three age groups. This suggests that direct mail can still be an effective marketing tactic with B2B buyers of all ages. It's also interesting to note that two very traditional media channels - television ads and print media - were among the top five most preferred channels for all three age groups.

The survey also revealed some significant differences among the age groups. For example, in-person conversation or consultation was a top five choice only for respondents in the 55-64 age group. In-person communication was ranked seventh by both the 35-64 age group and the 45-54 age group.

Despite all of the recent focus on social media, it wasn't a top five channel for any of the three age groups discussed in this post. However, it's important to note that social media was the third most preferred channel for respondents in the 18-34 age group, which suggests that social media will become a more important communication channel as the people who are now in this age group take on larger roles in the B2B buying process. 

Can Marketing and Sales Provoke Prospects to Change?

Astute B2B marketing and sales professionals have long recognized that their toughest competitor isn't usually a company that provides an alternative product or service, but rather the processes or solutions that their prospects are already using - the status quo. In most cases, no sale can be made unless prospects are first willing to sincerely reevaluate their current methods and practices.

Given the importance of the issue, it shouldn't be surprising that many marketing and sales thought leaders have advanced several techniques for "breaking the grip of the status quo." I described some of these techniques in an earlier post, but I've often wondered how effective they really are. The central question is:  Can marketing programs and/or sales conversations alone create a willingness to consider change, or is something else required to motivate a prospect to reexamine the status quo?

The answer to this question has major implications that are often underappreciated by both marketing and sales professionals. If marketing and sales activities can provoke a willingness to consider change in most prospects, then the content of our "top of funnel" marketing and sales messages should emphasize the need for change, and our goal should be to get our messages in front of as many legitimate prospects as possible. By "legitimate prospects," I mean companies with problems, needs, or challenges that our products or services can effectively address.

If, on the other hand, marketing and sales activities can support and enhance, but not usually provoke, a willingness to consider change, then our sales and marketing messages should emphasize how the status quo can be changed and how the change will result in a better status quo. In this circumstance, our goal should be to identify which prospects are already motivated to consider change and then get our messages in front of those prospects.

So, what's the answer to the question? The best evidence we currently have suggests that we shouldn't expect marketing programs and/or sales conversations alone to consistently provoke potential buyers to become open to change. The evidence does indicate that the right marketing and sales techniques can enhance a prospect's willingness to change, once the initial impetus exists.

For example, in a 2012 article for the Harvard Business Review, Brent Adamson, Matthew Dixon, and Nicholas Toman describe the strategies used by top-performing sales reps, as revealed in research by CEB. Adamson and Dixon are also the co-authors of The Challenger Sale, and in that book, they write that today's most successful sales reps use disruptive insights to teach potential buyers new ways of thinking about the issues their business is facing.

Does this mean, therefore, that disruptive insights are sufficient to consistently break the grip of the status quo? Not exactly. In the HBR article, the authors stress the importance of using disruptive insights with the right prospects. They argue that top-performing sales reps:

". . . pursue customers that have an emerging need or are in a state of organizational flux, whether because of external pressures, such as regulatory reform, or because of internal pressures, such as a recent acquisition, a leadership turnover, or widespread dissatisfaction with current practices. Since they're already reexamining the status quo, these customers are looking for insights and are naturally more receptive to the disruptive ideas that star performers bring to the table. . . Stars, in other words, place more emphasis on a customer's potential to change than on it's potential to buy." (Emphasis in original)

The reality is, identifying the right prospects to focus on is as critical to demand generation success as the specific marketing and sales techniques that we use. As the HBR article suggests, identifying prospects with a willingness to consider change is typically seen as a sales function. But what if we could identify which prospects are willing to change long before those prospects interact with our sales reps? With this insight, we could focus our marketing activities on those prospects and improve the productivity of our marketing programs and our overall demand generation efforts.

This is one of the core benefits promised by the providers of predictive analytics software and services. In a future post, I'll discuss how predictive analytics solutions work, and how effective they appear to be.

Illustration courtesy of R/DV/RS via Flickr CC.